Gold prices await to hear policy statements from the US Federal Reserve and the European Central Bank this week. Market watchers are awaiting to hear from the Fed on whether or not there will be another round of quantitative easing. The Fed will make their statement Wednesday while the ECB makes their statement on Thursday.

Last week it was earnings reports taking center stage, this week it's policy statements from the U.S. Federal Reserve and European Central Bank (ECB).

What comes out of the central banks could have a huge impact on the gold market. Gold prices have been on the rise - 2.5% last week - and could keep going depending on what the central banks deliver.

Gold prices on Monday saw their fourth consecutive day of increases. The August contract rose 0.1% to $1.70 with a $1,619.70 settlement price, thanks to market participants buying on optimism from this week's Fed action.

A two-day meeting begins today (Tuesday) for the Federal Open Market Committee (FOMC). After its conclusion Wednesday, market watchers will be waiting with bated breath on whether a third round of quantitative easing (or QE3 as it is fondly called) will take place.

If that isn't enough, there's Thursday's meeting over in Europe with the ECB. They're also set to make a monetary policy decision.

Let's take a look at these two potential actions that could drive up the price of gold.

Will the Fed Employ QE3?

While many market watchers will look to the Fed for an easing announcement, analysts warned it might be a hint that easing is to come, instead of a definite decision to employ QE3.

According to The Wall Street Journal, Standard Bank said in a research note, "We do not feel that this week will see an announcement of outright quantitative easing since we expect the Fed to wait until there are stronger signals that the U.S. economy is faltering. As such, we feel that any rallies off the back of QE3 hopes should be viewed with skepticism, and caution that the week could see heightened volatility."

For the year, gold is up 3.7% to $1,624. But that's the smallest year-to-date gain at this point in the year since 2005, suggesting demand for the commodity has been weaker than years' past.

But a signal from the Fed is what some investors have been waiting to see. Even if the signal isn't a clear start to QE3, a hint that it's on the way may be enough.

"Right now, it's clear that sentiment is clearly turning in gold's favor," UBS said in a note. "But it's also clear that despite last week's inflow of fresh longs, some hesitancy abounds. A much bigger pool of investors, while starting to pay attention to gold again, are biding their time before getting long. Investors are playing the waiting game, looking for the signal to get back in."

Can Draghi Work His Magic Again?

If the Fed doesn't come through on Wednesday, the market still has Thursday with the ECB's policy decision.

Markets saw a late rally Friday thanks to remarks by ECB President Mario Draghi.

Draghi calmed markets when he said, "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."

Draghi also said that a bond-buying program will be restarted after taking a long snooze this year.

Now there's a second opportunity for the ECB to rally markets and all eyes will be on the language in Thursday's statement, ideally pointing to action. Like the Fed, the ECB will also release a statement after its meeting.

Quantitative Commodity Research consultant Peter Fertig said to CNBC, "After the comments from Draghi, the ECB will have to deliver, otherwise it will end in catastrophe for the euro. He added, "If the ECB now delivers in cooperating with the EFSF (European Financial Stability Facility), there is a really good chance that we will see gold and silver break out to the upside."

Nick Trevethan, an ANZ Banking Group Ltd. analyst, estimates a record gold price within the next year based on how the central banks will handle the current economic picture.

"The low interest-rate regime, central-bank demand and further stimulus should create a fertile ground for gold bulls," Trevethan said to Bloomberg.

While expectations are high for both central banks to take action, more pressure lies on news from the ECB. And for gold watchers, there's a greater likelihood that if you're bullish, the ECB news may be on your side.

But if you think the actions of two central banks this week for monetary easing aren't enough to move gold markets, there's still the possibility that China may make a policy move or unemployment numbers could cause a rise.

Gold prices slipped 0.4% to $1,614 an ounce in trading Tuesday ahead of the FOMC statement on Wednesday.